A record Silgan year and growth expected in 2022

Silgan Holdings reported full-year 2021 net income of $359.1 million, compared to full-year 2020 net income of $308.7 million.

“The Silgan team delivered another year of record performance and double-digit earnings growth and continued to demonstrate the power of the company’s portfolio of essential products, disciplined capital allocation model, strong operational performance and relentless focus on meeting the unique requirements of our customers,” said Adam Greenlee, President and CEO.

“For the full year of 2021, the Company delivered record adjusted earnings per diluted share of $3.40, an 11 percent increase over the prior year record in 2020, and record free cash flow of $466.1 million. The Silgan team continued to successfully navigate the ongoing challenges related to the global pandemic, as demand remained at high levels for our Dispensing and Specialty Closures and Metal Container products with new record volume levels in both segments.

“Strong operational performance continued to help offset unprecedented inflation and on-going supply chain and labour challenges, which lessened through the fourth quarter but have yet to normalize.”

“Looking forward to 2022, we expect further improvements in the supply chain and labor issues as well as a more stable resin environment. In addition, our teams are diligently working towards the successful integration of the three acquisitions completed in 2021, which are expected to provide additional significant earnings growth in 2022.

“Therefore, we estimate adjusted earnings per share in 2022 in the range of $3.80 to $4.00, which represents a 15 percent increase at the midpoint over record 2021 levels. Our free cash flow estimate for 2022 is estimated at approximately $350 million, as we anticipate an increase in working capital primarily related to significant metal inflation in 2022, increased capital expenditures for growth investment opportunities with core customers and higher cash taxes which will more than offset strong earnings growth.”

Net sales of the Metal Container segment were $2.81 billion in 2021, an increase of $250.0 million, or 9.8 percent, as compared to $2.56 billion in 2020. This increase was primarily the result of the pass-through of higher raw material and other manufacturing costs, higher unit volumes of approximately 4 percent and favourable foreign currency translation, partially offset by a higher percentage of smaller cans sold.

The increase in unit volumes over record volumes in 2020 was due primarily to continued strong consumer demand levels for food cans and continued growth in pet food, as well as customer purchases in advance of significant raw material inflation expected in 2022.

Segment income of the Metal Container segment in 2021 was $253.7 million, an increase of $7.1 million as compared to $246.6 million in 2020, while segment income margin decreased to 9.0 percent from 9.6 percent in the prior year.

The increase in segment income was primarily attributable to higher unit volumes, higher pension income, higher foreign currency transaction losses in the prior year and lower rationalisation charges, partially offset by operational inefficiencies and higher costs as a result of labor and supply chain challenges, a higher percentage of smaller cans sold and the negative impact of a $1.0 million charge from the write-up of inventory for purchase accounting related to the Easytech acquisition in the fourth quarter of 2021.

Segment income margin was negatively impacted by the mathematical consequence of passing through significant raw material cost inflation during the year.

Segment income in the Metal Container segment is expected to improve in 2022, compared to 2021 as a result of more efficient operating performance, cost improvements, the pass-through of other cost inflation to customers, and the inclusion of a full year from the acquisition of Easytech, partially offset by lower unit volumes.

Net Sales in the Metal Container segment in 2022 are expected to increase due to the pass-through of significant raw material inflation in 2022.

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